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CMA Foundation · Fundamentals of Business Laws and Business Communication · Essential Elements of a Contract, Offer and Acceptance

Nair Brothers contracted to deliver 300 sacks of cement to Iyer Builders in three instalments: 100 sacks by 5 May, 100 by 5 June and 100 by 5 July, time being of the essence. Nair delivered the first two instalments on time, and Iyer accepted them. Nair failed to deliver the third by 5 July. Under Section 55, what is the effect?

The unperformed part of the contract becomes voidable at Iyer's option. Section 55 applies to so much of the contract as has not been performed, so the third instalment can be avoided by the promisee while the two completed instalments remain untouched.

  1. AThe whole contract, including the performed part, becomes void
  2. BThe contract becomes voidable only as to the part not yet performed, at Iyer's optionCorrect
  3. CThe contract stays fully enforceable because two instalments were completed
  4. DNair may choose whether to cancel the unperformed instalment

Explanation

Section 55 says the contract, or so much of it as has not been performed, becomes voidable at the promisee's option. Only the third instalment is unperformed, so Iyer may avoid that part. The performed instalments are not undone, and the option belongs to the promisee, not Nair.

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